January through March is the off-season for travel, so there are relatively fewer big credit card sign-up bonuses and other travel-related promotions. So now seems like a good time to talk about some thoughts on the future of credit cards, airline miles, and hotel points over the next decade.

Credit Cards

The Golden Age

When I first got into this hobby (around 2012), credit card issuers were just starting to really ramp things up, rolling out all kinds of huge sign-up bonuses to attract applications. At the time, banks were trying to boost business, so there were very few restrictions on credit card applications. There was nothing like the 5/24 rule or "only one card of the same type." As long as your credit history was good enough, applying for six or seven cards in a month was no problem. Of course, the high minimum spend requirements also gave rise to a strange spending strategy—manufactured spending (MS), meaning buying cash equivalents (Visa gift cards, gold coins, silver coins, money orders) and then finding ways to turn that money into checking deposits or directly pay credit card bills, cycling funds until the spending requirement was fully met. Banks were also trying to expand their customer base, so they came up with tools that were friendly to MS, such as Redbird, Bluebird, Serve, PayPal Cash, and Gobank.

It’s fair to say that credit cards were being discussed more intensely than ever, and blogs were popping up everywhere. My main sources of information at the time were two things:

  • English-language blogs (Boardingarea, Frequent Miler, Million Miles Secret): These bloggers wrote very detailed, beginner-friendly content, teaching us how to do MS, how to find credit card bonuses, and how to call and request a reconsideration to get approved faster. Since everyone was a beginner back then, each blog had something new to offer.
  • Forums (flytalk, mitbbs): Because there was so much deal-hunting going on, blogger content could be a little slower, and forums were where people got the latest information. As a long-running travel forum, flytalk had lots of travel experts and veteran card players, and the information there was detailed and accurate, so it was worth reading through the whole thread. mitbbs, as a Chinese-language forum, also had a dedicated money board where people discussed credit cards, with all kinds of experts showing what they could do.

The playbook was simple: apply for a card—call reconsideration—meet the minimum spend through MS—earn the bonus—close the card or ask for retention—repeat. If you were aggressive enough and timed things well, it was possible to manage a dozen-plus cards, even more than twenty in a year. Some cards could even be applied for repeatedly, and bugs like the AA card helped countless people quickly become million-mile holders. After learning the ropes, I started writing a blog myself to help explain credit cards, miles, and points, and I also earned quite a few referral bonuses.

In short, calling those two to three years the golden age of credit cards is completely appropriate. MS plus credit cards was basically an endless, no-brainer cycle.

The Dark Ages Begin

Of course, banks weren’t fools. Once they realized that people were gaming credit card applications, they gradually started changing the terms to rein things in, especially for people who took the sign-up bonus and then didn’t spend or simply closed the card. Issuers rolled out some deeply hated policies:

Credit card companies also started cracking down on people with unusual spending patterns—those who bought Visa gift cards to do MS. Points clawbacks and even shutting down entire households would happen from time to time. People also started to rein things in, and only a small group continued aggressive MS. But sign-up bonuses did not really drop much; what changed was that approval became harder, especially for people applying for many cards in a short period of time. Card strategy shifted from applying for everything to being selective and going after the best offers first, with the strategy of starting with Chase cards. Planned, deliberate application strategies became the norm, while some of the more aggressive players started looking for all kinds of application bugs.

Likewise, once banks that issued prepaid cards realized people were just using them to move money around rather than actually spending from them, they too started shutting things down. Blue Bird and Serve were shut down in several rounds, Walmart also tightened its MoneyCenter deposit rules, and Kate was gone as well.

The various blogs also came under criticism from hardcore forum users for promoting too much MS-related content, and forums began shifting toward more private internal communities. As loopholes gradually disappeared, forum content decreased, and blogs became more and more homogenized. The same news would be reposted across multiple blogs, leaving only a few top blogs with bank affiliate deals, churning out sponsored posts every day to promote cards with mediocre value.

Of course, there was still one breath of fresh air among the English-language blogs: DOC’s blog was excellent, with broad coverage and very fast updates, and it wasn’t even partnered with banks—it just did what was best for readers.

Then COVID Hit

Out of nowhere, the pandemic started spreading across the United States. Travel demand fell off a cliff, and people became much less interested in applying for cards. Cards that were more useful for everyday spending started getting more attention, and people also cared more about credit cards they could keep for the long term. Banks’ responses were also very noticeable:

  • Airline and hotel co-branded cards started adding bonus cash back for grocery, restaurant, and delivery spending, encouraging people to keep using airline and hotel cards even when they weren’t traveling.
  • Sign-up bonuses were not cut very much, and hotel cards actually became more generous
  • The time allowed to meet minimum spend requirements was extended, with more and more offers giving you six months—or even a year—to spend xxx and earn the bonus
  • Banks partnered more with everyday merchants, such as Instacart and Uber Eats
  • Some banks quietly started loosening approval restrictions (Chase’s 5/24 rule apparently no longer applied to co-branded cards)

However, because MS methods were shrinking, there were fewer ways to hit the minimum spend quickly, and people’s pace of applying for cards slowed down. People also tended to prefer cards they could hold onto for the long term.

Airline Miles and Hotel Points

The Early Days

Before 2012 (or even earlier), airline miles, hotel points, and loyalty programs were basically something only frequent business travelers played. That’s because you could only accumulate points and status relatively quickly by flying or staying at hotels. Gold, Platinum, and Diamond status required dozens of hotel nights or dozens of flights, which was basically impossible for ordinary people. Miles mainly came from flying or hotel stays, so balances were relatively small, and the value of points was much higher than it is now.

For enthusiasts, there were really only two more advanced ways to play, and both were for die-hard airline and hotel fans.

  • mattress run: this means getting more value from hotel stays than the cash you spend on them—for example, paying for a stay to qualify for a promotion, earn a lot of points, and rack up multiple elite-qualifying nights, then use that to reach a higher status tier. To make it more efficient, you might not even need to stay overnight; you could even try to check in remotely.
  • mileage run: this means taking extra cheap flights specifically to earn miles or elite status. Because flight-based earnings used to be directly tied to distance, as long as the ticket was cheap enough, the flights and miles you earned could actually be worth more.
  • hidden city: this means booking a cheaper A-B-C itinerary on purpose in order to get the lowest fare for A-B, then not taking the final segment
Due to the fact that a lot of travel is the basis for earning miles and points, international students mainly booked flights and hotels through third-party booking platforms. I remember that Priceline was especially fun to play with back then; people with the right tricks could tell directly which hotel was bidding, which saved quite a bit of money.

The Invasion of Credit Cards

The rise of airline and hotel co-branded cards completely changed how people played the points game. Sign-up bonuses on credit cards were often 60,000 points, and you could even transfer points. In the short term, people could apply for multiple credit cards from different banks and rack up a huge amount of miles. For example, British Airways (BA) miles at the time could be transferred from Membership Rewards, Ultimate Rewards, SPG (now converted to Marriott points), and Marriott points. BA miles could also be used to book AA flights, so it was incredibly easy to scrape together enough points for award tickets.

In addition, credit cards also introduced bonus multipliers on spending. Using airline or hotel co-branded cards at the corresponding merchants could earn multiple points, which greatly expanded the sources of miles. From that point on, airline miles and hotel points were no longer just for business travelers. Ordinary people and even international students could use credit cards to earn large amounts of points, and everyone began paying more attention to point and mile redemptions. Seeing people use points to stay at high-end hotels and fly business class, everyone rushed to apply for cards and followed the major blogs to chase sign-up bonuses. Seeing everyone so enthusiastic, credit card issuers also rolled out all kinds of record-high sign-up bonuses, and the entire airline and hotel co-branded card market was thriving.

Massive Issuance and Devaluation

Excessive money printing leads to inflation, and excessive miles and points issuance naturally causes point values to keep falling. The award charts once designed for business travelers have been trampled into pieces by card chasers. Hotel award nights are becoming harder and harder to book, and business-class award seats are becoming harder and harder to find. The huge amount of points released also gave rise to a group of professional ticket and room resellers. They bought points cheaply from card chasers, then through travel agencies or other channels connected with people who needed business class or high-end hotels (because those two had the highest margins), and used those points to book rooms or business-class seats for them. That only made it even harder for everyone to use points.

Of course, hotels and airlines have also seen this points glut. It is now unlikely that they can negotiate with credit card companies to lower sign-up bonuses, after all users’ habits and expectations have already been fully trained. For example, if a card came out with a $450 annual fee and only a 10,000-point sign-up bonus, it would probably get roasted by everyone. The simplest approach is to slowly devalue the points. The easiest way is to change the award charts, so AA, UA, and Delta have all started revising their charts, while quietly limiting award seats made available to other alliance airlines. Hotels have it even easier: by adjusting the categories of each hotel, they slowly move the popular hotels up in category.

We often say that points only have value when you use them. If you hold a pile of points and can’t use them, you can only watch them slowly devalue. AA and UA miles, once valued at 2c/p, shrank to 1.5c/p after a round of changes. Delta went a step further and simply eliminated the award chart, causing the value to drop straight to near zero. Hotels weren’t much better either; Hilton and Marriott points also kept losing value, and only Hyatt, due to its smaller number of hotels, still maintained a value of around 1.8c/p.

Dynamic Pricing and Cash Is King

Constantly changing award charts obviously makes people uncomfortable, and it also makes the airlines look a bit capricious, so is there a one-and-done solution? Delta came up with a very good answer: dynamic pricing! As the name suggests, dynamic pricing ties the miles required for a ticket to the current cash price of the ticket. For example:

Under the old redemption rules, the mileage price for a Los Angeles–New York award ticket was fixed and depended only on cabin class, regardless of how much the ticket cost at the time. After the change, when ticket prices go up, the miles required go up; when ticket prices go down, the mileage price goes down. And the cleverest part is that Delta never disclosed how much 1 Delta mile is worth in cash. If it were fixed at 1.5c/p, then 10,000 miles would guarantee a $150 ticket. But without that certainty, Delta can use miles to cap award tickets. For example, a $150 ticket might be priced at 30,000 miles.

Everyone knows airline pricing already uses very mature algorithms that maximize revenue for the airline. Changing award tickets to dynamic pricing is also a one-and-done solution, since there is no need to keep adjusting the miles required for each route. And by controlling redemption value as a black box, the airline can firmly control the value of the miles in everyone’s accounts. This approach isn’t necessarily a bad thing for beginners; using miles no longer requires thinking about whether it is a good deal, you just use them if you can. But for experienced players, who used to choose the best routes based on the characteristics of each airline’s miles to get the highest value, now they can only sit back and take it...

So far, Delta, AA, and UA have all begun implementing some degree of dynamic pricing. By comparison, Asian airlines are still relatively generous and haven’t followed suit. Hotels were a bit slower, starting first with peak and off-peak redemptions, but gradually Hilton, Marriott, Hyatt, and IHG have also begun rolling out dynamic redemptions. It is foreseeable that sweet spots for redemptions will become fewer and fewer; if you need to redeem, just redeem directly.

Let me also mention airline and hotel elite status programs here. In the past, an airline’s elite status was closely tied to the miles and number of flights taken, and the miles earned were also highly correlated with distance flown; it really was about accumulating miles. Now, however, airlines care much more about how much you spend on tickets, and the idea of flight miles is basically dead in name only. Hotels are the same: spending money is a hard requirement, points are calculated based on how much you spend, and the number of stays is of course also part of the equation. From this perspective, mileage runs and mattress runs will become less and less common, because the return is directly tied to spending, leaving no loopholes to exploit.

About the Future

Originally this article was meant to discuss the future of credit cards and points and miles with everyone, but I couldn’t help but summarize the overall changes over the years. Let’s predict how the industry will develop in the future—at the end of the year, let’s see how many of these happen this year

  • Credit card sign-up bonuses will not fluctuate much, while premium card sign-up bonuses will rise by about 20%
  • Credit cards will expand partnerships with other merchants and launch more reimbursements and extra benefits
  • Cash-back categories tied to everyday life will continue to increase, and redemption will also designate certain categories to receive higher redemption values
  • Miles and airline elite status will be completely decoupled from flight miles, and will depend only on the number of flights and how much is spent on tickets
  • Airline co-branded cards will add ticket reimbursement benefits for the corresponding airline
  • Related blogs will continue to shrink, and homogeneous content will increase further

I’ll also make a prediction for the situation in 2022 for each bank:

  • AMEX will continue to claw back points people earned through loopholes and will restrict some users’ referral function
  • Chase canceled the 5/24 restriction, but kept the one-card-per-product-family restriction. Chase Sapphire Reserve 120,000 welcome bonus
  • Citi relaunched the Prestige card, adding hotel, Uber, and airline credits, with an annual fee of $550
  • Capital One continued adding transfer partners, but still not including major U.S. airlines or major hotel points programs
  • Barclays didn’t do much, and continued reducing U.S. credit card issuance
  • Wells Fargo rolled out a batch of new cards, but there still weren’t any great ones; same old story
  • U.S. Bank didn’t do much, and won’t link the three Altitude cards together

    • No matter what, I still hope the pandemic ends soon. Only when travel demand picks up can credit cards really flourish.

    I wonder what memorable experiences everyone has had over these ten years? Feel free to share in the comments.